CIMB Bank has countered allegations that it has stopped approving new mortgages for shoebox apartments because of the risks involved, according to a report by The Business Times.
This was in response to an article featured in The PropertyGuru newspaper and online last week which highlighted that banks were denying finance applications for small units.
CIMB noted that when approving a home loan, banks primarily focus on the buyers’ ability to repay their mortgage, rather than the size of the homes.
“We are still approving and financing new home loans for buyers of apartments that are less than 510 sq ft in size (the size of shoebox units),” noted a CIMB spokesman in Singapore.
“The report that financing for shoebox units is no longer being offered by CIMB is incorrect,” he added.
The BT article added that aside from CIMB, other banks such as United Overseas Bank, OCBC Bank and DBS continue to offer loans for very small homes.
Coreen Kwan, Head of Retail Banking at CIMB Singapore, said CIMB is guided by a broad range of criteria when assessing credit risk prior to granting a home loan.
“We primarily look at his Credit Bureau report, perform litigation checks and also look at his loan statements with other banks if applicable and available, and internal records if he is an existing customer,” she said.
“We also look at his ability to repay and afford the loan. We ascertain his exposure to credit facilities and his income to cover such exposures.”
Meanwhile, the original story published by PropertyGuru was based on information provided by a senior CIMB source with knowledge of the situation. It was subsequently confirmed by another CIMB staff member in a phone call to PropertyGuru earlier this week.
None of the nine banks contacted by PropertyGuru prior to the story being published, including CIMB, wished to comment on the record regarding the availability or otherwise of financing for shoebox mortgage applications, although a number confirmed that all such applications were being declined at this time.
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